How Much Has ObamaCare Saved You?
President Obama is scheduled to speak today on how the new Minimum Loss Ratio (MLR) regulations are forcing insurance companies to offer rebates. Think of rebates as mistakes the insurers make as they adjust to the new system. Once they figure it out, there won’t be any rebates. But, even temporarily, it appears that premium hikes caused by the MLR exceed the rebates by quite a large margin. The folks at InsureBlog provide these numbers:
| 2011 total premiums: $710 Billion |
| 2011 rebates issued: $1.3 Billion |
| 2012 total premiums: $760 Billion |
| 2012 rebates issued: $500 Million |
So, thanks to MLR, insurance companies took in an additional $50 billion in 2012 and paid out $800 million less in rebates.
See our previous post on MLR regulation.
Wow, quite a change. How do they not foresee this?
“According to Aon average increases in premiums from 2011 to 2012 were 7% (conservative again)”
thats a bit
“From the US Census Bureau: for 2011 to 2012 the number of people purchasing private insurance has remained flat at roughly 197,300,000”
Yeah, but wait for the individual mandate.
It will probably go down as businesses drop employees and more people are shoveled into the exchanges.
ObamaCare has only cost me. My state (Wash.) already had the 80/20 rule, so no rebates. Also, my premiums have increased 18-19% every year since 2010, and estimates for 2014 are 89% because my current catastrophic/HSA plan will no longer be allowed. Unfortunately, I will not qualify for the “generous” subsidies, either, so will be one of the victims of the subsidy “cliff”.
I’m sure that your story is representative of a lot of people’s situations.
Yes, but probably not enough to get anyone to notice. Even my friends and family who support ObamaCare seem to think I am making these numbers up. I wish.
The case for it is that it would be helping increase the number of people insured, especially those low-income folks with pre-existing conditions. But I know it’s a lot of political rhetoric, however, it’d be interesting to see a study of this post-October.
I’ve always advocated for universal coverage, but because ObamaCare does not adequately address the underlying causes of sky-high medical costs, improving insurance coverage alone is not the answer. I, too, am very interested to see what happens after October 1. But right now I’m wondering how to pay for health insurance with premiums that are 22% of my annual income!
All I know is the day the first Obamacare regs went live (27 year old slacker mandate etc) My Copay went from 15 to 25 and my deductible from 0 to 500. Thank you Obama for saving me money by forcing me to subsidize the healthcare of future-wealthy college students from relatively well off homes.
My personal experience is roughly in line with these numbers.
Premiums for a grandfathered HSA qualified young adult policy went up by more than $50 a month thanks to OCare. The rebate check was a whopping $19.
It makes me feel real warm, and not at all fuzzy.
So far everything is the same for me. I can’t comment on much else.
“Once they figure it out, there won’t be any rebates.”
I’m not so sure about that. Right now every insurer is calculating what its premium will be in 2014. They base that on what they expect medical expenses will be that year. It is impossible to be perfectly accurate in their predictions, but if they guess too low they will not have enough premiums income to cover expenses — they will have a loss they can never recoup. If they guess too high they will have to rebate some money in the following year — but meanwhile they get to invest that money and are protected against a loss.
The incentive will always be to overcharge and pay back a portion, rather than undercharge and never recover the loss.
“Once they figure it out, there won’t be any rebates.”
Actually, I imagine there will be MORE rebates, but only because that’s the way to maximize their revenues. For every $1 that they increase premiums over their costs, they only after to “rebate” 80 cents, meaning they get an extra 20 cents.
Say they pay out $4,000 in qualified medical benefits. If they charge $5,000 in premiums, they can keep $1,000 and won’t pay a rebate.
But let’s say they double the premiums. They charge $10,000, but still only pay out $4,000 in benefits. That means they’d owe a rebate of $4,000 (80% of $10,000 less than actual $4,000 in costs). But that also means they’d get to keep $2,000 in profit, even though they suddenly pay a rebate.
How perverse is that?
Jonathan, your comment is astonishingly misleading. Do you really think we’re that stupid?
You seem to be laboring under the idea that insurance companies can charge whatever they want. (Yes, that’s an understandable and forgivable mistake, given their past practices of increasing their rates by large amounts, year after year after year. But even a despicable health insurance company can’t DOUBLE their rates in one year. Even our broken, inefficient health insurance market wouldn’t tolerate that.)
But even if they could, you seem to be saying that this law somehow enables insurance companies to make MORE profits under the ACA’s Medical Loss Ratio limitations, rather than less. That is absurd on its face. If an insurer could in fact double their premiums, as you contend, then without the ACA’s limits, they would get to keep ONE HUNDRED PERCENT of the increase, instead of just 20% as the ACA prescribes!